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So I found with multiple users setup on a Mac, if you use the Fast User Switching menu and select "Login Window..." to "lock" your Mac, if you click your name after doing this, it will require a manual password.

Although, if I allow my screensaver to come on and require a password, when returning to my Mac the Watch Auto Unlock works as expected.

Not sure why "locking" your Mac manually with the Fast User Switching menu disables Auto Unlock and requires a manual password when logging back in. :confused:

I found that a good workaround is in Security & Privacy, set your Mac to require a password "immediately" after screensaver or sleep. Then in the Screensaver settings, setup a hot corner to start the screensaver. After using the hot corner to trigger the screensaver, my Watch will now unlock my Mac when logging in again. :cool:
 
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Try rebooting the watch. I had same problem and powering off and on again solved.
 
And you're on iOS 10 and watchOS 3 + Sierra?

Correct. GM IOS10 and Sierra and the OS3 that was just released yesterday.
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Under system preferences, security and privacy do you see the option allow your Apple Watch to unlock your mac? If so, make sure it is checked off. Maybe try deselecting the option and reselect the option. Then do a reboot if it's still on.

That's the checkbox I can't get to work. When I check it my Mac displays a message "Turning on" that goes on and on for minutes until it finally gives up with a message saying it can't communicate with the watch. I also rebooted the Mac, the phone, and watch.
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Try rebooting the watch. I had same problem and powering off and on again solved.

Tried that....didn't work for me.
 
Have you tried on the Apple Watch App, Go to - General -> Apple ID, and then sign in?.
If you already have, you could try to do the bothersome task of logging out and relogging on your devices.
 
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Fro the release notes: Auto Unlock Setup The Auto Unlock feature is supported on 2013 and newer Macs. The Auto Unlock feature requires that you enable your iCloud account to use Two-Factor Authentication (not Two-Step Verification), install the latest iOS 10 on your iPhone, and the latest watchOS 3 on your Apple Watch.
 
Well, I'll be pickled...it works now! Did one more round of reboots on everything, opened up the MacBook after letting it sleep for a while, then the next time I opened the lid I got a message about having to have Bluetooth on for the watch to unlock the phone. I thought hmmm this is promising. Turned on BT and now it works. Strange. I did all of this before. I guess one more boot did the trick.
 
Well, I'll be pickled...it works now! Did one more round of reboots on everything, opened up the MacBook after letting it sleep for a while, then the next time I opened the lid I got a message about having to have Bluetooth on for the watch to unlock the phone. I thought hmmm this is promising. Turned on BT and now it works. Strange. I did all of this before. I guess one more boot did the trick.

Are you using Two-Factor Authentication on your iCloud account?
 
Well, I'll be pickled...it works now! Did one more round of reboots on everything, opened up the MacBook after letting it sleep for a while, then the next time I opened the lid I got a message about having to have Bluetooth on for the watch to unlock the phone. I thought hmmm this is promising. Turned on BT and now it works. Strange. I did all of this before. I guess one more boot did the trick.

I'd also taken all of the necessary steps to enable the feature but it wouldn't work for me either.

Disabled two-factor authentication, rebooted my Mac Mini and Watch and enabled my iPad/iPhone/iPod Touch as trusted devices.

Seemed to work then.
 
It's definitely not working great.

I didn't have any problems setting it up, but the actual unlocking only works 1 out of 3 times. Most of the times it says "Unlocking using Apple Watch", then after a second shows you the password box.
 
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I may post a separate thread about this issue, but I learned much to my chagrin that I cannot use the SMS authentication to engage this feature, which is really annoying because I was looking forward to that.

Why would Apple require I go to the inherently LESS secure system of security questions instead of the multiple device system where they send me a SMS 4 digit text code for authentication? I DESPISE that entire security Q & A routine. It's clunky and outdated, AND requires that I add these questions and answers into my password manager.

Stupid stupid stupid!
 
Let me know if Bluetooth doesn't need to be on. I usually have Bluetooth on and when I shut it off, it said that it needed to be on.
 
Not working for me as well. Summer 2014 MacBook Pro with both Bluetooth and Wifi on running macOS Sierra, Apple Watch running WatchOS3, two-step verification turned off at AppleID website (much to my chagrin), rebooted both Mac and Watch.

When trying to select "Allow your Apple Watch to unlock your Mac," I get the following error:

"Two-factor authentication is required to allow your Apple Watch to unlock your Mac. To turn on two-factor authentication, you must first turn off two-step verification at appleid.apple.com."

As previously noted, two-step verification is off. Apple has sent me email confirming that.
 
Not working for me as well. Summer 2014 MacBook Pro with both Bluetooth and Wifi on running macOS Sierra, Apple Watch running WatchOS3, two-step verification turned off at AppleID website (much to my chagrin), rebooted both Mac and Watch.

When trying to select "Allow your Apple Watch to unlock your Mac," I get the following error:

"Two-factor authentication is required to allow your Apple Watch to unlock your Mac. To turn on two-factor authentication, you must first turn off two-step verification at appleid.apple.com."

As previously noted, two-step verification is off. Apple has sent me email confirming that.

I refuse to revert to two factor verification, as appealing as using the Watch proximity to bypass the password requirement to unlock the MacBooks. It's a less secure and clunky system. Apple tech support was unable to provide a coherent explanation for this requirement.
 
I was having no luck with this either...figured it was because I was using WatchOS 3 Beta and I needed to upload the final version so I deleted the developer profile in the watch app. It didn't change anything in the software update menu but I've noticed ever since deleting the profile my watch has unlocked my mac flawlessly ever since.
 
2013 MacBook?! Wow....that's really old. I change my MacBook or iMac every 2 years. 2 years are long...but 3 years. Wow. Maybe it's because your MacBook is too old for this feature.
 
Two-factor authentication is required to allow your Apple Watch to unlock your Mac. To turn on two-factor authentication, you must first turn off two-step verification at appleid.apple.com

WHY?
 
2013 MacBook?! Wow....that's really old. I change my MacBook or iMac every 2 years. 2 years are long...but 3 years. Wow. Maybe it's because your MacBook is too old for this feature.

LOL, yeah it's so old. Hoping for a new Macbook to come out this fall. But I can confirm that the 2013 Macbook Retina works fine with this feature.
[doublepost=1473888308][/doublepost]Ironically, now this feature seems to work almost too well. Normally when I would step away from my desk I would put the Mac to sleep. But now every time I do that it automatically wakes to unlock. I had to accomplish this through a keychain preferences setting that puts a little lock icon in my menu bar that allows me to lock my Mac and step away.
 
OK, apparently you have to walk away for a while. When I came back to my Mac after a couple hours, setting up Apple Watch unlocking worked.

You have to enable two-factor authentication, which involves entering your Apple ID password twice and your Mac password twice. Not exactly "It just works" simplicity here...

Save for the fact that they aren't ready for iOS10 yet, my old method of using Near Lock was a lot simpler.
 
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